Virtual land grabs kicks off in expansion of generic top-level domain regime

Nearly a year on from ICANN’s announcement that the current 22 top level domain names (what comes after the last dot) were to be increased dramatically, the first 1,930 applications, for 1,410 different gTLDs, have been published, allowing the process to move closer to activation. Jonny Mayner reports.

Topic: Domain names

Who: The Internet Corporation for Assigned Names and Numbers (ICANN)

When: Applications open from January 2012

Where: Worldwide

Law stated as at: June 2012

What happened:

More than 1,900 applications for new generic top level domains ("gTLDs") have now been accepted by the Internet Corporation for Assigned Names and Numbers ("ICANN").

At present there are only 22 gTLDs (such as .com, .net, .org) in addition to a handful of country code top level domains (such as .co.uk, .de, .fr). A new regime has allowed any private or public organisation which meets certain criteria to apply for a new gTLD which can comprise any combination of characters. These may be general terms such as .car or .bank but can be brand-specific such as .landrover or .hsbc.

Successful applicants will become domain registry operators for an initial ten year period under registry agreements with ICANN. It is expected that some successful applicants will operate open registries and allow other parties to register second-level domains under them (for a fee), while some will maintain closed systems for use only by themselves or other businesses working in partnership with them.

The first application round closed in April 2012, and the list of applications published on 13 June 2012 provided the first indication that the new gTLDs have proved more popular than many commentators had predicted. The full list of applications is available via ICANN's website.

Who has applied for what?

In total 1,930 applications have been accepted by ICANN, 116 of which are in non-Latin scripts including Arabic, Chinese and Russian. Some 230 of the gTLDS on the list are the subject of multiple applications from different applicants. In those instances, which applicant prevails will ultimately be decided by auction, with the most contested gTLDs expected to be purchased for millions of dollars. The gTLD with most applications was .app, with 13 applicants in the running.

One of the biggest surprises has been the sheer number of gTLDs that some of applicants have applied for. Leading the pack with more than 300 applications is Donuts, a business established and funded by venture capital specifically for the purpose of applying for and running gTLDs. Donuts has applied for each gTLD in the name of a different operating company and is easily overlooked on the applications list.

The front-running household name is Google, with 101 applications lodged under the name of Charleston Road Registry. Not far behind is Amazon with 76 applications. Given that each application needs to be backed up by a $185,000 evaluation fee, this virtual land-grab hasn’t come cheaply. Many of the gTLDs applied for by Google and Amazon are the subject of multiple applications and they are in competition with one another for a number of gTLDs, including .cloud, .free, .game, .map, .music, .play, .search, .shop, .store and .talk. It is expected that these gTLDs will be used as portals for the provision of goods and services by Google and Amazon or their selected partners, agencies or advertisers. The other big spenders in this first application round are in the main dedicated internet registry businesses which are likely to operate open domain registries.

Which .brands have been applied for?

Roughly 25% of the applicants correspond to trade or brand names owned by the applicants. As expected, businesses with a focus on consumer goods, technology or a strong online presence have applied for such gTLDs. Notable applicants in this field are Apple (.apple) and Microsoft (.microsoft, .windows and .xbox among others) in addition to the aforementioned Google (.google, .youtube) and Amazon (.amazon, .kindle). Other household names from the automotive, aerospace, financial services and manufacturing sectors were also well represented in the application list.

What about cybersquatting?

As expected, the costs involved in the application process seem to have deterred opportunistic applications for gTLDs which correspond to the trade mark rights of non-applicants. That said, even a brief examination of the list of applications shows that some applications for seemingly generic words correspond to brands owned by businesses other than the applicant. While these applications are not likely to have been made maliciously, it remains possible that objections will be raised by brand owners.

As with the present gTLD regime, the real risk of cybersquatting exists in relation to registration of second-level domains under the gTLD (e.g. www.brandname.com). In the absence of a mechanism for preventing the sale of domains which correspond to brand owners' trade mark rights, no second-level domain registration system is going to be free of the problem of cybersquatting. Given the massive proliferation of gTLDs brand owners will have to be more vigilant than ever in preventing third parties from registering and using second-level domains that infringe their trade mark rights under the new gTLDs.

In particular, most brand owners will be keen to prevent third parties registering and making use of websites at addresses such as www.brandname.porn, www.brandname.sex, www.brandname.sucks or www.brandname.wtf (all of these gTLDs have been applied for).

ICANN has sought to put some mechanisms in place to assist brand owners. In addition to the Trademark Clearinghouse (see below) and the normal domain name dispute resolution procedures, a Uniform Rapid Suspension procedure will be put in place with the intention of providing an efficient and inexpensive mechanism for dealing with obvious instances of cybersquatting.

What happens next?

The applications will be divided into batches and each batch evaluated in turn, with applications for the same gTLD to be evaluated in the same batch. The first batch of around 500 evaluations is due to commence in early July 2012 and be completed in early 2013. Subsequent batches are expected to comprise around 400 applications each.

A public comment period is open until 12 August 2012. Any individual, entity or group can submit comments to ICANN in relation to any of the gTLDs applied for. Any comments will be relayed to the evaluators of the relevant application. The comments are publicly viewable on the ICANN website. As at the date of writing the applications which have generated most comments from the public are applications for .art, .church and .patagonia. Comments have also been made submitted raising concerns about the .sex, .sucks and .wtf applications mentioned above.

Formal objection period

A formal objection period is also open until approximately mid-January 2013. The grounds on which an objection may be raised are:

String confusion: where the gTLD applied for is confusingly similar to an existing TLD or another gTLD applied for in the same application round;

Legal rights objections: where the gTLD applied for infringes the legal rights of the brand owner raising the objection, including registered and unregistered trade mark rights;

Limited public interest objections: where the gTLD applied for is contrary to generally accepted legal norms of morality and public order that are recognised under principles of international law; and

Community objections: where there is substantial opposition to the gTLD application from a significant portion of the community to which the gTLD string may be explicitly or implicitly targeted.

Objection filings must be accompanied by a fee expected to range from USD$1,000 to USD$5,000.

ICANN's guidebook estimates the costs in straightforward disputes may be as low as USD$2,000 to $8,000 with more complex disputes costing up to USD$56,000 for adjudication by a one member panel or USD$122,000 for a three member panel.

Trademark Clearinghouse

From around October 2012 brand owners will be able to list their registered trade marks in a Trademark Clearinghouse, at an estimated cost of around $150 per mark. Businesses which list their marks in the Clearinghouse will be afforded the opportunity to purchase second-level domains corresponding to those trade marks under any new gTLDs before those gTLDs are opened to the public for second-level domain registration. Additionally once the gTLD is open to the public, any applicant for a second-level domain which exactly matches a trade mark in the Clearinghouse will be notified of the brand owner's trade mark rights. Brand owners will however only be notified once a second-level domain corresponding exactly to one of their listed trade marks has been registered.

Why this matters:

This is a significant milestone in the evolution of the internet as a tool for businesses to reach customers, however it continues to present real challenges to brand owners. Below is a list of five things that businesses should do in response to the publication of the new gTLD applications.

1. Review the published list of applications. Are any of the GTLDS applied for identical or similar to your registered trade marks? Has anyone applied for a generic term that relates to your industry that you feel should not be in the hands of one stakeholder?

2. Consider submitting any comments or objections. You can submit comments on any application without triggering an objection process. Consider doing so either on your own or in concert with other interested parties. Seek advice on the merits of any objection you may wish to file.

3. Ensure your own trade mark portfolio is in good shape. Make sure any trade marks you wish to rely on in objection proceedings are validly registered. This applies to applicants as much as to potential objectors.

4. Consider using the Trademark Clearinghouse. The proposed Clearinghouse is not without its flaws, but it may be worth lodging at least a small portfolio of registered trade marks in the Clearinghouse, both as a deterrent to would-be cybersquatters and to afford you the right of first refusal on any second-level domains under the new system.

5. Monitor the roll-out and use of the new gTLDs. There may be lessons to be learned from how this first batch of applicants fares throughout the application process and in their use of new gTLDs which are granted. The next round of applications may not come for a while, but be prepared to apply if you think your business can benefit from owning a gTLD.